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Thursday, May 29, 2014

Clausing: Lessons for International Tax Reform from the U.S. State Experience Under Formulary Apportionment

Kimberly A. Clausing (Reed College), Lessons for International Tax Reform from the US State Experience Under Formulary Apportionment:

This work undertakes a comprehensive analysis of the US state experience under formulary apportionment of corporate income. While formulary apportionment eliminates the possibility of shifting income across states through accounting strategies that manipulate where income is booked, it may heighten the tax responsiveness of formula factors. The present analysis uses the substantial variation in corporate tax policy decisions of US states over the period 1986 to 2012 to understand the consequences of formulary apportionment better. It examines the effects of policy choices regarding tax rates, formula weights, and other parameters on economic activity, estimating the tax sensitivity of employment, investment, and sales. With the inclusion of adequate control variables, results indicate that economic activity has not been particularly sensitive to US state corporate tax policy choices, especially in recent years. Still, tax policy choices have important effects on corporate tax revenues. These results suggest important lessons regarding possible international adoption of formulary apportionment.

May 29, 2014 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 385

IRS Logo 2Wall Street Journal editorial:  IRS Judgment Day: The Untalkative Agency Comes Under Scrutiny From a Federal Judge:

The IRS continues to evade questions about its handling of applications for tax-exempt status from groups whose political views conflicted with the Obama Administration's. That may change. A federal judge's ruling will force the agency to defend itself in court and go through discovery on its handling of a slow-tracked application.

In 2009 a Pennsylvania group called Z Street applied to the IRS for tax-exempt status for its mission of educating people about Zionism and other policies related to Israel and the Middle East. In May 2010 the group received a request from the IRS for more information, which it sent. According to Z Street's complaint, two months later the agent in charge of reviewing the application told Z Street's counsel she was holding up the application because of her concerns that the group engaged in advocacy related to the Middle East. 

According to the complaint, Agent Diane Gentry said that special attention was given to Israel-related groups and that "these cases are being sent to a special unit in the D.C. office to determine whether the organization's activities contradict the Administration's public policies." We've since learned that the agency's November 2010 "Be On the Lookout" list also flagged agents to look out for words related to Israel or "inflammatory" references to "disputed territories." ...

This ruling will force the IRS to open its books on the procedures it used and decisions it made reviewing Z Street's tax-exempt application, procedures it has tried to keep shrouded. As the case proceeds, Z Street's attorneys can seek depositions from many who have been part of the larger attempt to sit on similar applications by other conservative groups.

It will be fascinating to see which names— Lois Lerner, former head of IRS tax-exempt scrutiny?—show up in the internal email traffic. The Administration may have a harder time evading accountability now that a judge will be supervising the testimony.

Continue reading

May 29, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, May 28, 2014

Blank & Mason Present U.S. National Report on Exchange of Information Today at Annual Congress of European Association of Tax Law Professors

EATLP Logo (2013)Joshua D. Blank (NYU) & Ruth Mason (Virginia) present United States National Report on Exchange of Information at the 2014 Annual Congress of the European Association of Tax Law Professors today in Istanbul, Turkey:

The United States recently has taken an aggressive stance towards non-reporting of offshore income and attendant offshore tax evasion. This National Report discusses administrative and legal mechanisms, including the Foreign Account Tax Compliance Act (FATCA), available to the United States to secure offshore tax information. It also discusses the legal regimes under which the United States shares tax information with partner jurisdictions.

See also Joshua D. Blank (NYU) & Ruth Mason (Virginia), Exporting FATCA, 142 Tax Notes 1245 (Mar. 17, 2014).

Update #1:  Tracy Kaye (Seton Hall), Leandra Lederman (Indiana), and Stephen Mazza (Kansas) at the conference:

Photo 2

Update #2:  Joshua Blank (NYU), Tracy Kaye (Seton Hall), Ruth Mason (Virginia), Leandra Lederman (Indiana), Tsilly Dagan (Bar-Ilan), and Steven Mazza (Kansas) at the conference:

EATP

May 28, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Nate Silver on the Financial Times' Challenge to Thomas Piketty's Data Underlying His Increasing Inequality Claims

CapitalFollowing up on my previous posts on the new book by Thomas Piketty (Paris School of Economics), Capital in the Twenty-First Century (Harvard University Press, 2014):

FiveThirtyEight:  Be Skeptical of Both Piketty And His Skeptics, by Nate Silver:

My goal here is not to litigate the individual claims made by Giles; see The New York Times’ Neil Irwin or The Economist’s Ryan Avent for more detail on that. Rather, I hope to provide some broad perspective about data collection, publication and analysis. A series of disclosures: First, my economic priors and preferences are closer to The Economist’s than to Piketty’s.  Second, I haven’t finished Piketty’s book, although I’ve spent some time exploring his data. Third, I’m no expert on macroeconomic policy or macroeconomic data. Fourth, this comment rather liberally takes advantage of our footnote system; there’s a short version (sans footnotes) and a long version (avec).

My perspective is that of someone who has spent a lot of time compiling and analyzing moderately complex data sets of different kinds. Also, I’m someone who, like Piketty, has seen his public profile grow unexpectedly in recent years. I consider myself extremely fortunate for this — however, I know that attention can sometimes yield disproportionate praise and criticism. Throat-clearing aside, here’s what I have to offer. ...

Continue reading

May 28, 2014 in Tax | Permalink | Comments (0)

New Law School Opens in San Diego

San Diego
San Diego Daily Transcript, Opportunity Law School Opens in San Diego:

San Diego Law School, the new branch campus of San Francisco Law School, is open and accepting applications for Fall 2014. San Francisco Law School, the oldest evening law school in the Western United States, is a California Accredited Law School, and is WASC Accredited as a school of Alliant International University. San Diego Law School is the first new branch campus approved by the State Bar of California in ... 87 years.

The San Diego Law School program is taught by experienced and practicing legal professionals and integrates core law instruction with practical skills and innovative Bar Exam skills training. "Our students come to law school because they care about their community, and return to practice there after graduation," said Jane Gamp, Dean of San Francisco Law School. With tuition substantially more affordable than its ABA counterparts and the availability of financial aid for qualified students, San Diego Law School will match a need in the legal community. ...

California is unique in offering a "fresh start" to those who were not as successful in their first year of law school as they would like. The small classes and personal attention given at schools like San Francisco Law School, and now San Diego Law School, are well suited to assist these second start students. San Diego Law School will be housed in the iconic Walter Library on the Alliant campus at Scripps Ranch located at 10455 Pomerado Road, San Diego, CA 92131. Alliant International University is private non-profit university.

Tuition is $24,750 (assuming a 30-credit load).

May 28, 2014 in Legal Education | Permalink | Comments (0)

Shanske: The Federal Role in Municipal Debt Finance

Darien Shanske (UC-Davis), The Feds Are Already Here: The Federal Role in Municipal Debt Finance:

Should the federal government be involved in the regulation of municipal debt finance? The answer is arguably not. But this theoretical dispute is not the focus of this Article because, in fact, the federal government already regulates municipal debt finance extensively, generally much more extensively than the states regulate their municipalities’ use of debt. The primary source of federal regulation is the securities laws. Less well-known is that federal tax law also serves as an important constraint. This Article surveys and critically evaluates these federal laws, and comes to three tentative conclusions. First, the current federal oversight “system,” unplanned and ad hoc as it is, has been effective. Second, in part because the current system has never been thought of as a comprehensive system, there are low-hanging fruit in terms of making the system work better. To the extent the federal government does not put these reforms in place, states should. Third, even an optimally operating federal overlay does not absolve the states from more careful regulation of the financial affairs of their localities, particularly as to the use of debt. Above all, what the federal government does not — and ought not — do is provide localities with the expertise to use debt optimally; this is another area where the states should focus their reform efforts.

May 28, 2014 in Scholarship, Tax | Permalink | Comments (0)

Death of Joe Marshall

Photo 2Philadelphia Inquirer, Joseph Marshall, Temple Law Professor:

Joseph W. Marshall Jr., 88, of Philadelphia, a professor emeritus at Temple University Law School, died Sunday, May 4, of congestive heart failure at Bryn Mawr Hospital.

The law school hailed him on its website as "a legendary tax professor who served the law school from 1960 to his retirement in 1996."

His was a quick rise. He began as a lecturer in 1960, then served as an associate professor for two years before being named a full professor in 1968. In addition to teaching taxation, Mr. Marshall developed the Graduate Tax Program and directed it from 1970 to 1984. During that time, he served as acting dean from 1970 to 1971 and again in 1980.

(Hat Tip: Jim Maule.)

May 28, 2014 in Obituaries, Tax | Permalink | Comments (1)

REFinBlog Joins the Law Professor Blogs Network

LPBN LogoI am delighted to announce that REFinBlog, edited by Brad Borden (Brooklyn) and David Reiss (Brooklyn), has joined the Law Professor Blogs Network.  

With the support of our sponsor Wolters Kluwer Law & Business/Aspen Publishers, the Network is seeking to expand in two ways.

First, I am actively recruiting law professors to launch blogs in other areas of the law school curriculum not currently covered by the Network, including Administrative Law, Bankruptcy, Intellectual Property, National Security, Native American Law, Race and the Law, and Trial Advocacy.

Second, I am actively recruiting law professors to affiliate their existing blogs with the Network, like Brian Leiter's Law School Reports, Brian Leiter's Law School Rankings, REFinBlog, The Right Coast, and Sentencing Law and Policy

The Network offers law professors the premier blogging platform and the opportunity to share in growing sponsorship and advertising revenues. For more information about these opportunities, see here.

May 28, 2014 in About This Blog, Legal Education, Tax | Permalink | Comments (0)

Crocodile Injured by Falling 264-Pound Accountant

UPI:  Crocodile Injured by Falling Accountant During Circus Bus Accident in Russia; The Animal Vomited for Several Hours After It Was Crushed by a 264-Pound Accountant:

CrocA Russian reptile was hurt and vomited for several hours after it was crushed by an overweight accountant during an accident on a circus bus.

When the bus hit a pothole, the 264-pound female accountant went flying and landed on top of the 6.5-foot crocodile, RIA Novosti reported.

The crocodile, Fyodor, got sick after the unexpected slam and threw up for three hours. A medical examination of the animal revealed that he had not suffered internal injuries, but he was held out of his next performance, Komsomolskaya Pravda reported. Circus officials expect that Fyodor will be able to return to performing by the weekend.

Fyodor was reportedly experiencing shock symptoms, as was the Soviet Circus accountant who fell on him. The accountant also suffered cuts and bruises.

May 28, 2014 in Tax | Permalink | Comments (3)

Kathryn Keneally, Assistant Attorney General for the Tax Division, to Leave June 5

Department of Justice Press Release:

KKKathryn Keneally, Assistant Attorney General for the Tax Division, will leave her post at the Department of Justice effective June 5, 2014, she announced today.

“Over the past two years, Kathryn Keneally has provided exemplary leadership to the Justice Department's Tax Division, setting a standard of excellence, integrity and professionalism that will guide and challenge those who carry the division’s important work into the future,” said Attorney General Eric Holder. “As a result of her determined efforts, her exceptional judgment, and the tireless work of her colleagues across the division -- and their partners nationwide -- the Tax Division has secured historic gains in our fight to protect the American people from tax fraud and financial misconduct and to hold accountable any individual, bank or other institution that violates our tax laws. Although I wish her the best as she seeks new challenges and opportunities, I will miss her wise counsel and her tireless commitment to the mission we share. I thank her for her service to the American people.”

Keneally was sworn in as the Assistant Attorney General for the Tax Division on April 6, 2012.  Before joining the department, she practiced law in New York City, representing individuals and businesses before the Internal Revenue Service and the Department of Justice in criminal and civil tax cases.  She also appeared and tried cases in the federal district and appellate courts, and in the U.S. Tax Court.  Keneally also served as the chair of the ABA Section of Taxation's Committees on Civil and Criminal Tax Penalties and Standards of Tax Practice, and was a vice chair of the Section of Taxation.  She will be returning to her home in New York.

May 28, 2014 in Tax | Permalink | Comments (1)

Arizona Law School Cuts Nonresident Tuition by 30% (on Top of 2013's 8% Cut); Takes Aim at Arizona State, California Law Schools

Arizona Daily Star, UA Law School to Undercut Peers With Deep Tuition Discounts:

Arizona LogoThe University of Arizona’s law school is turning up the heat on its competitors as demand for traditional law degrees continues to dwindle.

In a second round of tuition-slashing set to take effect this fall, the UA plans to undercut the nonresident tuition rates of more than a dozen peer law schools nationwide by offering steep discounts to students from other states. ...

Nonresidents who paid more than $42,000 last school year to study law at the UA will soon pay $29,000 a year, a drop of more than 30 percent. The rate for an in-state law student will stay about the same, around $24,400.

The change leaves the UA’s law school with the cheapest nonresident tuition rate of its 15 peer schools around the country. Each charges $10,000-$30,000 a year more.

The UA’s new rate also is about 30 percent cheaper than what its sister institution, Arizona State University in Tempe, charges nonresident law students. ASU will charge about $41,700 this fall, nearly $13,000 more than the UA. ...

It’s the second year in a row the UA has cut law tuition for nonresidents. Rates this school year were reduced by 8 percent for nonresidents and also by 11 percent for residents.

The UA’s law school was the first in the nation to cut prices, and some are starting to follow suit. The University of Iowa, for example, recently cited the UA’s cuts in a bid to trim its nonresident rates.

University of Arizona James E. Rogers College of Law, Nonresident Tuition Lowered:

At $29,000 annually Arizona Law is among the lowest cost of the nation's top-tier law schools. This tuition is lower than many other state resident tuitions. [Dean Marc] Miller added that he had noted marked interest among prospective law students in California, and expected a higher number of applications in this admissions cycle.

Arizona Board of Regents, Program Fee Request:

Rationale for request
The drastic nationwide downturn in law school applications and renewed focus on affordability gives us an opportunity to attract additional highly qualified non-resident students by lowering our non-resident cost to more closely reflect what non-resident students pay. Non-resident full costs at $29,000 will place us below – and for the most part substantially below – undiscounted resident (and non-resident) tuition at all of our Western ABOR peer schools. We will continue to provide substantial need and merit-based aid, including a 14% set-aside from differential tuition, albeit less to non-residents and more to residents. Revenue generated from additional students will benefit all students. Overall, we believe that the tuition reduction will improve accessibility and allow our students to graduate with less debt in line with historic public values.

Arizona Chart

Wall Street Journal, University of Arizona Law School Woos Bargain Hunters With Tuition Drop:

University of Arizona is among several law schools that have sought to lure price-sensitive students amid a national decline in applicants. Penn State Law, Brooklyn Law School, University of Iowa College of Law and University of La Verne College of Law have all slashed their prices in the last year. [But see Public Law School Tuition Cuts Are Less Than Meet the Eye.]

Above the Law, Law School Announces 30 Percent Tuition Cut:

Another school has surveyed the landscape of legal education over the next several years and recognized that, to paraphrase Jimmy McMillan, the tuition was too damn high. Reduce the sticker shock and get a leg up on peer institutions.

May 28, 2014 in Legal Education | Permalink | Comments (2)

The IRS Scandal, Day 384

IRS Logo 2Government Executive:  Justice Fires Back at Issa on Testimony Over IRS Probe:

Tuesday, May 27, was the day the Justice Department was supposed to produce a key prosecutor to testify to staff on a House panel probing alleged political favoritism at the Internal Revenue Service.

But that was according to a May 22 letter sent to Attorney General Eric Holder by House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., who is concerned about what he sees as improper coordination between IRS and Justice in deciding which groups to investigate for possible campaign finance law violations.

As of publication time May 27, there was no scheduled appearance by Jack Smith, chief of Justice’s Public Integrity Section, and no updated comment from the department or Issa’s panel.

What did emerge on Tuesday was a letter from Justice explaining its procedures and reasoning on questions of testifying to Congress. It comes as the latest wrinkle in the year-old controversy over IRS efforts to single out for extra scrutiny certain nonprofit groups applying for tax-exempt status

Continue reading

May 28, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, May 27, 2014

Blank Presents Reconsidering Corporate Tax Privacy Today at Bocconi University

BlankJoshua D. Blank (NYU) presents Reconsidering Corporate Tax Privacy, 11 N.Y.U. J. L. & Bus. ___ (2014), at Bocconi University today in Milan, Italy, hosted by Carlo Garbarino.

For over a century, politicians, government officials and scholars in the United States have debated whether corporate tax returns, which are currently subject to broad tax privacy rules, should be made publicly accessible. Throughout this age-old debate, participants have speculated about how corporate managers and the IRS might behave differently if they knew that the public could observe corporations’ tax returns and how investors and the general public would respond if they had access to this information. There is, however, another, unexplored perspective: how could seeing other corporations’ tax returns affect how corporate managers engage in tax planning and tax return preparation for their own corporations?

Continue reading

May 27, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The (Non)Finality of Supreme Court Opinions

New York Times:  Final Word on U.S. Law Isn’t: Supreme Court Keeps Editing, by Adam Liptak:

The Supreme Court has been quietly revising its decisions years after they were issued, altering the law of the land without public notice. The revisions include “truly substantive changes in factual statements and legal reasoning,” said Richard J. Lazarus, a law professor at Harvard and the author of a new study examining the phenomenon. [The (Non)Finality of Supreme Court Opinions, 128 Harv. L. Rev. ___ (2014):

Hiding in plain sight at the top of a Supreme Court opinion when first issued is a formal notice that “this opinion is subject to formal revision.” Readers have long assumed that any such revisions are both rarely made and entirely nonsubstantive in nature. Neither is true. Apart from the anticipated routine proofreading corrections of typographical errors, misspellings, and incidental grammatical mistakes, which are many, the Justices routinely correct mistakes in majority and separate opinions relating to the arguments of the parties, record below, historical facts, relevant statutes and regulations, opinions of their colleagues, and Court precedent. The Justices also, even more significantly, sometimes change their initial reasoning in support of their legal conclusions. To all these ends, they sometimes add, delete, and substitute words, phrases, and sentences. Unaware of the existence and degree of such changes, the public routinely refers to versions of opinions of the Court and of Justices that, while superseded, are nonetheless perpetuated through lower court opinions, websites, and even leading academic casebooks.

This article is the first to explore the Court’s practice of revising its opinions after initial publication, which one Justice privately referred to as “a strange and reverse basis” and a Court official described as “completely at odds with general publishing practices.” The article examines the depth and breadth of the practice since the Court’s first opinions through present days. It describes both the institutional reasons for the practice, which one Justice privately speculated extended to each Justice’s natural inclination to “rush to judgment” and “to get ‘on the scoreboard’” as soon as “all the votes are in” and possibly “to guard against any last minute shifting of a vote.” The article also describes how the Court’s related procedures for revision have shifted over time to become increasingly less transparent and potentially lacking in the degree of procedural fairness and rigor appropriate for opinions of the Court and of the Justices. The article recommends that the Court amend its current practices to provide at the very least for after-the-fact disclosure of changes made both to increase transparency and to provide, indirectly, some check against unnecessary substantive changes. The article further recommends that the Court consider the possibility of providing prior notice as well in certain circumstances.]

[M]ost changes are neither prompt nor publicized, and the court’s secretive editing process has led judges and law professors astray, causing them to rely on passages that were later scrubbed from the official record. The widening public access to online versions of the court’s decisions, some of which do not reflect the final wording, has made the longstanding problem more pronounced.

May 27, 2014 in Legal Education, Scholarship | Permalink | Comments (1)

NY Times: Colleges Rattled as Obama Seeks Rating System

New York Times, Colleges Rattled as Obama Seeks Rating System:

The college presidents were appalled. Not only had President Obama called for a government rating system for their schools, but now one of his top education officials was actually suggesting it would be as easy as evaluating a kitchen appliance.

“It’s like rating a blender,” Jamienne Studley, a deputy under secretary at the Education Department, said to the college presidents after a meeting in the department’s Washington headquarters in November, according to several who were present. “This is not so hard to get your mind around.”

The rating system is in fact a radical new effort by the federal government to hold America’s 7,000 colleges and universities accountable by injecting the executive branch into the business of helping prospective students weigh collegiate pros and cons. For years that task has been dominated by private companies like Barron’s and U.S. News & World Report.

Mr. Obama and his aides say colleges and universities that receive a total of $150 billion each year in federal loans and grants must prove they are worth it. The problem is acute, they insist: At too many schools, tuition is going up, graduation rates are going down, and students are leaving with enormous debt and little hope of high-paying jobs.

The idea that the government would try to rate the schools has rattled the entire higher education system, from elite private institutions to large state universities to community colleges. ...

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May 27, 2014 in Legal Education | Permalink | Comments (5)

NY Times: IRS Bars Employers From Dumping Workers Into Health Exchanges

New York Times:  IRS Bars Employers From Dumping Workers Into Health Exchanges:

Many employers had thought they could shift health costs to the government by sending their employees to a health insurance exchange with a tax-free contribution of cash to help pay premiums, but the Obama administration has squelched the idea in a new ruling. Such arrangements do not satisfy the health care law, the administration said, and employers may be subject to a tax penalty of $100 a day — or $36,500 a year — for each employee who goes into the individual marketplace.

The ruling this month, by the IRS, blocks any wholesale move by employers to dump employees into the exchanges.

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May 27, 2014 in IRS News, Tax | Permalink | Comments (1)

Blank Presents In Defense of Individual Tax Privacy at the University of Milan

Blank Joshua D. Blank (NYU) presented In Defense of Individual Tax Privacy, 61 Emory L.J. 265 (2011), at the University of Milan’s Department of International, Legal, Historical and Politcal Studies yesterday in Milan, Italy, hosted by Giuseppe Marino:

The debate over whether tax privacy—a set of statutory rules that prohibits the federal government from publicly releasing any taxpayer’s tax return— promotes individual tax compliance is as old as the income tax itself. It dates back to the Civil War and resurfaces often, especially when the government seeks innovative ways to collect tax revenue more effectively. For over 150 years, the tax privacy debate has followed predictable patterns. Both sides have fixated on the question of how a taxpayer would comply with the tax system if he knew other taxpayers could see his personal tax return. Neither side, however, has addressed the converse question: How would seeing other taxpayers’ returns affect whether a taxpayer complies? This Article probes that unexplored question and, in doing so, offers a new defense of individual tax privacy: that tax privacy enables the government to influence individuals’ perceptions of its tax-enforcement capabilities by publicizing specific examples of its tax-enforcement strengths without exposing specific examples of its tax enforcement weaknesses. Because salient examples may implicate well-known cognitive biases, this strategic-publicity function of tax privacy can cause individuals to develop an inflated perception of the government’s ability to detect tax offenses, punish their perpetrators, and compel all but a few outliers to comply. Without the curtain of tax privacy, by contrast, individuals could see specific examples of the government’s tax-enforcement weaknesses that would contradict this perception. After considering this new defense of individual tax privacy in the context of deterrence and reciprocity models of taxpayer behavior, I argue that the strategic-publicity function of tax privacy likely encourages individuals to report their taxes properly and that it should be exploited to enhance voluntary compliance.

The commentators were Giuseppe Zizzo (Bocconi University) and Andrea Pedroli (Università della Svizzera italiana).

May 27, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

LGBT Activists File FOIA Request for Virginia Law Prof Douglas Laycock's Email

Charlottesville Daily Progress, LGBT Activists Take UVa Professor to Task For His Stance on Cases (more here and here):

LaycockUniversity of Virginia legal scholar Douglas Laycock is facing criticism from gay rights groups for his support of religious freedom laws that activists say could lead to discrimination against the lesbian, gay, bisexual and transgender community. Activists also are upset at his support for Hobby Lobby in an ongoing Supreme Court case involving contraception coverage.

Laycock, who is married to UVa President Teresa A. Sullivan, is the subject of a Freedom of Information Act records request by two UVa student activists — Gregory Lewis and Stephanie Montenegro. In an open letter to the professor, Lewis and Montenegro said that while they respect Laycock’s right to academic freedom, they believe his writings supporting controversial religious freedom laws are holding back progressive causes such as access to contraceptives and gay marriage. ...

“As leaders on the UVa campus, we strongly believe in engaging in dialogue, and, equally as important, for professors to truly understand the implications of their work,” the letter continues.

Commentators across the ideological spectrum have condemned the actions of the UVa law students:

Stephen Bainbridge (UCLA), The Purge Arrives at the University of Virginia: PC Thugs versus Douglas Laycock:

The continuing effort by left-liberals to silence any dissent from their politically correct mandates is now taking on a famed legal scholar:   [The UVa student] said they’re not trying to smear Laycock, and they’re not trying to undermine academic freedom. They just want a dialogue, he said.

Bullshit. You don't start a dialogue with FOIA requests. This is a blatant effort at deterring public participation by anyone who does not hew 100% to the most radical version of the gay rights movement.

“I think it would be really constructive for him to hear how his work is being used to hurt the LGBTQ community,” said [the student]. “I don’t think he has any ill intent. I think he’s very thoughtful and moderate, and willing to hear both sides. But I think that everyone really has a lot to learn.”

My God. The pomposity and arrogance of these children (of the corn?) is just amazing. It's time to start fighting back. There have to be consequences for people like [them] or the day will come when they and their ilk will have successfully silenced the rest of us.

Brian Leiter (Chicago), Dear UVA Students: In Prying Into Prof. Laycock's E-mails You Are Attacking His Academic Freedom:

Douglas Laycock (Virginia) is, I would agree, on the wrong side of a number of recent religious liberty issues in both his advocacy and in his scholarship, but students requesting his e-mails are engaged in harassment and intimidation that infringe upon his academic freedom.  Cut it out, kids!  No good will come of this kind of mischief.

Walter Olson (Cato Institute), Critics Hit U.Va. Prof. Douglas Laycock With FOIA:

No one could doubt that Laycock’s views on religious accommodation are part of a set of intellectually derived convictions that run through decades of his work. (In addition to opposing such forms of church-state entanglement as officially sponsored prayer, he supports the right of gays to marry.) It’s simply a matter of trying to arm-twist a tenured, well-recognized scholar who takes a position that the Forces of Unanimity consider wrong. ...

It might also be time for legislators to clarify state open-records laws to determine under what circumstances they can be used to go after academics, and consider altering them, where appropriate, to provide for financial or other sanctions when they are misused.

May 27, 2014 in Legal Education | Permalink | Comments (22)

The IRS Scandal, Day 383

TaxProf Blog Holiday Weekend Roundup

Monday, May 26, 2014

Ten Life Lessons From Navy SEAL Training

Commencement address by Naval Admiral William H. McRaven (Commander of U.S. Special Operations Command), University of Texas (May 17, 2014) (click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate):

Transcript below the fold:

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May 26, 2014 in Legal Education, Tax | Permalink | Comments (14)

Memorial Day Tax Resources for U.S. Armed Forces (and Their Families, Employers)

IwaContinuing a TaxProf Blog Memorial Day tradition, I want to pass along links to the Tax Information for Members of the U.S. Armed Forces material maintained on the IRS web site:

The tax laws provide some special benefits for active members of the U.S. Armed Forces, including those serving in combat zones. For federal tax purposes, the U.S. Armed Forces includes officers and enlisted personnel in all regular and reserve units controlled by the Secretaries of Defense, the Army, Navy and Air Force. The Coast Guard is also included, but not the U.S. Merchant Marine or the American Red Cross. However, these and other support personnel may qualify for certain tax deadline extensions because of their service in a combat zone.

For dozens of links to military tax resources, see below the fold.

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May 26, 2014 in Tax | Permalink | Comments (0)

State Income Tax Revenues Fell in 2014 First Quarter; Ohio (-19%), California (-11%) Among Biggest Revenue Losers

Wall Street Journal, Income Tax Yo-Yo Hits U.S. States:

Many state governments were pulled out of the recession by a surge in tax revenue from their residents' stock-market gains. But that money spigot has slowed, leaving budget holes and debates over the reliance on the wealthy just as many governors face re-election.

While a number of states had forecast lower growth this year in personal income-tax revenue—which is derived in part from capital gains on investments—they failed to project the degree of the decline.

Government figures show that state income tax collections nationwide slipped 0.4% in the first quarter, the first drop since the end of 2009, according to the Nelson A. Rockefeller Institute of Government. But the decline is magnified in some states.

Ohio

-19.3%

North Dakota

-19.1%

Maine

-15.3%

California

-11.1%

North Carolina

-9.2%

Iowa

-4.1%

Mississippi

-3.7%

South Carolina

-3.7%

Virginia

-1.1%

Kansas

-0.1%

A Federal Reserve Bank of Chicago study found that over the last decade, state revenues have become increasingly sensitive to the economy, with tax revenue from residents' investment returns a key reason. There are indications the increased volatility is here to stay, said Richard Mattoon, an economist at the Chicago Fed and one of the authors of the 2012 report [State Tax Revenues over the Business Cycle: Patterns and Policy Responses].

May 26, 2014 in Tax | Permalink | Comments (2)

The IRS Scandal, Day 382

Sunday, May 25, 2014

Charleston Law School Founders Withdrew $25 Million in Profits, Leaving School in Precarious Financial Condition

Charleston LogoFollowing up on my prior posts (links below):  Charleston Post and Courier, Charleston School of Law Founders Withdrew $25 Million in Profits Leaving School on Shaky Financial Ground:

Five respected judges and lawyers started the Charleston School of Law a decade ago with the lofty goal of training attorneys committed to public service.

But beginning in 2010, the well-connected founders and owners with deep South Carolina roots began draining money from the school, withdrawing $25 million in profits by 2013 that they split among themselves.

The owners had a great deal of support from the Charleston community to launch the school, including a below-market-rate land deal from the city aimed at helping it remain on the peninsula and earn accreditation from the ABA.

Their taking out the profits instead of re-investing in the school has left it in such financial shambles its future remains uncertain.

Kevin Hall, a Columbia lawyer who represents InfiLaw System, a company trying to purchase the school, revealed the surprising financial information about founders Robert Carr, George Kosko, Ralph McCullough, Alex Sanders and Ed Westbrook at a public hearing last week. "The Charleston School of Law, ladies and gentlemen, is in a financial tailspin," Hall said.

Carr, Kosko and Westbrook, the three remaining owners, confirmed Hall's description of the school's financial situation, and they all agreed that it got that way because owners for years had been pulling profits from the institution.

Charleston's tuition is $37,874 per year.  89% of Charleston's Class of 2013 took out student loans, in an average amount of $146,766 (the 14th highest amount among all law schools).  53.3% of Charleston's Class of 2013 secured full-time, long-term, bar passage required jobs (compared to the 57.0% national average).

Prior TaxProf Blog posts:

Update:

May 25, 2014 in Legal Education | Permalink | Comments (7)

Top 5 Tax Paper Downloads

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads on SSRN, with a new #1 paper and new papers debuting on the list at #4 and #5:

  1. [281 Downloads]  The New Flat Tax: A Modest Proposal for a Constitutionally Apportioned Wealth Tax, by John Thomas Plecnik (Cleveland State)
  2. [262 Downloads]  Just Say No: Corporate Taxation and Corporate Social Responsibility, by Reuven S. Avi-Yonah (Michigan)
  3. [207 Downloads]   It's Time for the Supreme Court to Address the Economic Substance Doctrine, by Andy Grewal (Iowa)
  4. [176 Downloads]  The Real Problem with Carried Interests, by Heather M. Field (UC-Hastings)
  5. [175 Downloads]  Carried Interest for the Common Man, by Richard Winchester (Thomas Jefferson)

May 25, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Indiana Tech Law School Dean Resigns After Enrolling Inaugural Class of 28 Students

Indy Tech (2014)Following up on my previous posts (links below):  Fort Wayne Gazette, Indiana Tech’s Law Dean Leaves; Professor Fills In:

Less than a year after opening its doors, Indiana Tech’s law school lost its dean.

On Friday afternoon, Indiana Tech announced that law school Dean Peter Alexander, also a vice president at the university, stepped down Wednesday. In a news release, Alexander said he achieved the goals he had established for the law school and had a desire to pursue other employment opportunities.

The law school opened in September [with 28 students]. ...

Indiana Tech announced andré douglas pond cummings, who does not use capital letters in his name, will serve as the interim dean at the school. Cummings is the associate dean for academic affairs and a professor of law at the fledgling law school.

Indiana Lawyer, Indiana Tech Begins ABA Accreditation Proccess:

After opening its doors and accepting its first class of students in August, Indiana Tech Law School has begun the process of applying for accreditation, a critical step that could determine whether the institution will be able to continue to attract and accept students. ...

Indiana Tech Law School sent a letter in March notifying the ABA of its intent to seek accreditation and will submit a self-study in August which will explain what the school is about, where it wants to go and what challenges it faces. If the school does well it could have provisional approval by the end of the spring 2015 semester.

Update

Prior TaxProf Blog coverage:

May 25, 2014 in Legal Education, Tax | Permalink | Comments (4)

The IRS Scandal, Day 381

Saturday, May 24, 2014

Financial Times: Data Errors Undermine Piketty's Increasing Inequality Claims

CapitalFollowing up on my previous posts on the new book by Thomas Piketty (Paris School of Economics), Capital in the Twenty-First Century (Harvard University Press, 2014):

Financial Times, Piketty Findings Undercut by Errors:

Thomas Piketty’s book, Capital in the Twenty-First Century, has been the publishing sensation of the year. Its thesis of rising inequality tapped into the zeitgeist and electrified the post-financial crisis public policy debate. 

But, according to a Financial Times investigation, the rock-star French economist appears to have got his sums wrong.

The data underpinning Professor Piketty’s 577-page tome, which has dominated best-seller lists in recent weeks, contain a series of errors that skew his findings. The FT found mistakes and unexplained entries in his spreadsheets, similar to those which last year undermined the work on public debt and growth of Carmen Reinhart and Kenneth Rogoff.

The central theme of Prof Piketty’s work is that wealth inequalities are heading back up to levels last seen before the first world war. The investigation undercuts this claim, indicating there is little evidence in Prof Piketty’s original sources to bear out the thesis that an increasing share of total wealth is held by the richest few.

Prof Piketty, 43, provides detailed sourcing for his estimates of wealth inequality in Europe and the US over the past 200 years. In his spreadsheets, however, there are transcription errors from the original sources and incorrect formulas. It also appears that some of the data are cherry-picked or constructed without an original source.

For example, once the FT cleaned up and simplified the data, the European numbers do not show any tendency towards rising wealth inequality after 1970. An independent specialist in measuring inequality shared the FT’s concerns.

Financial Times, Piketty Response to FT Data Concerns:

Let me first say that the reason why I put all excel files on line, including all the detailed excel formulas about data constructions and adjustments, is precisely because I want to promote an open and transparent debate about these important and sensitive measurement issues (if there was anything to hide, any “fat finger problem”, why would I put everything on line?).

Let me also say that I certainly agree that available data sources on wealth are much less systematic than for income. In fact, one of the main reasons why I am in favor of wealth taxation and automatic exchange of bank information is that this would be a way to develop more financial transparency and more reliable sources of information on wealth dynamics (even if the tax was charged at very low rates, which you might agree with).

For the time being, we have to do with what we have, that is, a very diverse and heterogeneous set of data sources on wealth: historical inheritance declarations and estate tax statistics, scarce property and wealth tax data, and household surveys with self-reported data on wealth (with typically a lot of under-reporting at the top). As I make clear in the book, in the on-line appendix, and in the many technical papers I have published on this topic, one needs to make a number of adjustments to the raw data sources so as to make them more homogenous over time and across countries. I have tried in the context of this book to make the most justified choices and arbitrages about data sources and adjustments. I have no doubt that my historical data series can be improved and will be improved in the future (this is why I put everything on line).

Pejman Yousefzadeh, Facts Are Stubborn Things . . . As Thomas Piketty Is Beginning to Find Out:

The charges are devastating, and there is plenty to back them up. And again, let’s be abundantly clear: The Financial Times is accusing Thomas Piketty of dishonesty, of making up his arguments, of actively trying to mislead readers and actively trying to mischaracterize inequality trends. This mischaracterization leads to policy prescriptions on Piketty’s part that are both entirely unrealistic in their design and implementation, and, more importantly, are wholly unsupported by the actual data on inequality. The main thrust of Thomas Piketty’s book is entirely undermined, and his arguments and conclusions are annihilated. It is hard to imagine a more comprehensive refutation.

Having established that Piketty’s conclusions are shredded and unbelievable, it is important now to note two things. The first is that the Financial Times–and Chris Giles and Ferdinando Giugliano in particular–deserve kudos for the scholarship and for shining a light on Piketty’s mistakes and dishonesty. For those who are wondering how journalism ought to be done, look no further than the example set down by Giles, Giugliano and the Financial Times in general. They have truly done excellent work. Would that more media outlets followed the example that Giles, Giugliano and the Financial Times have set.

The second thing we ought to note is that neither Giles, nor Giugliano, nor the Financial Times would have discovered that Piketty’s books is fundamentally flawed if they listened to Paul Krugman, who famously said on his blog that “if you think you’ve found an obvious hole, empirical or logical, in Piketty, you’re very probably wrong. He’s done his homework!” Yes, that was a real statement by Paul Krugman, and yes, it ought to haunt him for the rest of his life–and beyond. We now know that it is more accurate to say that Piketty fudged his homework.

New York Times, A New Critique of Piketty Has Its Own Shortcomings, by Justin Wolters:

I drew the following five conclusions from The Financial Times’s re-analysis:

  1. Not all differences are errors
  2. They essentially agree
  3. Not all differences are equally important
  4. The F.T.'s bottom line is muddier than it looks
  5. This is a debate about wealth inequality, not income inequality.

Of course, one can’t help but be reminded of the kerfuffle about an earlier research paper written by Carmen Reinhart and Ken Rogoff. I fear the similarities are deeper than most realize, with partisans already engaged in gaining political mileage out of sloganeering about fairly inconsequential spreadsheet errors, rather than digging more deeply into what the data actually say. The difference is that this time the political football is an empirical result that is an article of faith among liberals, rather than conservatives. Beyond that, though, it’s different mudslingers, but similar mud.

The Financial Times analysis is definitely provocative. While it raises important questions, I’m not convinced it does more than that. Mr. Piketty has already written a fairly general response to The F.T.'s analysis, but he has yet to respond to the specific charges made. One hopes that in time Mr. Piketty will write a longer and more detailed point-by-point reply, admitting errors where they exist, and defending his data choices where they are defensible.

And perhaps some good will come from all this. The clearest effect of Mr. Piketty’s efforts is that he has brought new attention to the distribution of wealth. I believe that interest will continue to improve and refine our understanding of the evolution of wealth inequality.

New York Times, Is Piketty All Wrong?, by Paul Krugman:

[I]s it possible that Piketty’s whole thesis of rising wealth inequality is wrong? Giles argues that it is:

The exact level of European inequality in the last fifty years is impossible to determine, as it depends on the sources one uses. However, whichever level one picks, the lines in red in the graph show that – unlike what Prof. Piketty claims – wealth concentration among the richest people has been pretty stable for 50 years in both Europe and the US.

There is no obvious upward trend. The conclusions of Capital in the 21st century do not appear to be backed by the book’s own sources.

OK, that can’t be right — and the fact that Giles reaches that conclusion is a strong indicator that he himself is doing something wrong. ...

The point is that Giles is proving too much; if his attempted reworking of Piketty leads to the conclusion that nothing has happened to wealth inequality, what that really shows is that he’s doing something wrong.

None of this absolves Piketty from the need to respond to each of the individual questions. But anyone imagining that the whole notion of rising wealth inequality has been refuted is almost surely going to be disappointed.

May 24, 2014 in Book Club, Tax | Permalink | Comments (3)

Tenured Wisconsin Prof Sues Former Student Over Online Comments on Her Teaching

Inside Higher Ed, Rating or Defaming?:

Many professors dislike instructor review websites, saying they attract disgruntled students in particular and thus offer a skewed – but very public – account of their teaching abilities. Others say students aren’t always the best judges of teaching ability, and that they tend to rate easier courses and professors more highly than meaningful but challenging ones. But most professors now see being rated on the Internet – good or bad – as an inevitable part of the job.

SVBSally Vogl-Bauer, a tenured professor of communications at the University of Wisconsin at Whitewater, doesn’t dispute that students retain the right to exchange opinions about professors online. But in a civil suit filed in a Wisconsin circuit court, she says that a former student’s extensive online commentary about her teaching amounts to defamation -- not protected speech. She says the student, after being dismissed from the university, “engaged in an intentional, malicious and unprivileged campaign” throughout 2013 to besmirch her reputation. She says it resulted in “substantial economic, reputational and emotional injuries,” and she’s seeking an unspecified amount in damages.

The case raises questions about the line between rating and defaming one’s professor, and of what, if any, ethical and legal obligations students have in publicly assessing professors’ performance.

The suit says Llewellyn made similar, allegedly false statements in a letter to a professional organization, the Eastern Communication Association. The letter also says Vogl-Bauer told the student that men are “sexist,” and that she “screamed” and “lashed out” at him, and accused him of plagiarism. Llewellyn in the letter allegedly says that Vogl-Bauer engaged in “unjust and unethical teaching practices” and that she acknowledged all of those behaviors and apologized for them. Llewellyn also allegedly sent an email to Vogl-Bauer’s department colleagues containing similar comments.

Vogl-Bauer did not respond to a request for comment. Her lawyer, Timonthy Edwards, who is also an adjunct professor of law at the University of Wisconsin Law School, in Madison, said his client’s case was not about whether or not students can rate their professors online. “I’ve taught at the law school for 15 years, and both [Vogl-Bauer] and I get student evaluations every year,” Edwards said. “We would never suggest that that right should be taken away from anyone who has criticism for an instructor. But this is completely different.” Edwards continued: “When somebody goes onto the Internet because they’ve gotten a bad grade or result they don’t like, and anonymously posts things to get even or secure revenge, and they do it over and over again intentionally, that’s not protected speech. You can’t do that, no matter who you are or where you are.”

In the suit, Vogl-Bauer alleges that her former master’s-degree student, Anthony Llewellyn, defamed her on various teaching review and other web sites, including blogs and YouTube. She says he lied in saying that she “degraded,” and “verbally attacked” him. He also allegedly lied by saying that Vogl-Bauer called him a “horrible student,” deducted points from his grade, and was responsible for his being dismissed by the university.

Jonathan Turley (George Washington), Wisconsin Professor Sues Former Student Over Bad Evaluations Posted on the Internet:

The question will come down to what is demonstrably untrue and what is merely an opinion. The case reminds one of Mr. Chow of New York v. Ste. Jour Azur, 759 F.2d 219, (2d Cir. 1985), where a Chinese restaurant sued a food critic for a negative review. ...[The Second Circuit] found that the statements were protected as “opinion.”

Simple Justice, Sensitive Sally Smacks Special Snowflake Student Silly:

It may be that some of Llewellyn’s factual, as opposed to opinion, assertions aren’t true, though it’s likely impossible for Vogl-Bauer to prove.  So a student and professor had discussions, which he says were mean and degrading and she says were kind and wonderful.  What else is new? Absent some magical ability to prove the statements defamatory, Vogl-Bauer’s suit is dead in the water.

Yet, the fact of a professor suing a former student who thought she was the most awful professor ever is where this devolves to besmirch her reputation far more than this student possibly could.  His vendetta comes off as nothing more than a vendetta. His communications appear infantile and ridiculous; another butthurt kid lashing out.  This is the stuff you laugh off, not sue over.

And the fact that Llewellyn went to such extremes to pursue his hate on Vogl-Bauer isn’t a reason to sue a student, but a reason to get him therapy.  This is the conduct of an internet nutjob, that crazed person sitting up all night in a dark room trying to think up new and bizarre ways to attack the person shooting gamma rays at his brain.  You pity someone like this. You don’t sue him.

But now that Sally Vogl-Bauer has chosen the road to the courthouse, a new level of crazy has been breached.  Students sue professors and schools. Professors sue students who LIE, LIE, LIE about them in their public assessments.  Today, it’s crazed talk on the internet, because everyone knows that if it’s on the internet, it must be true.  Tomorrow, it’s the student assessment handouts at the end of class and a whisper campaign to the incoming frosh.

And if Vogl-Bauer’s reputation was so easily besmirched by one student’s vendetta, she might be better advised to work on her rep.

That students have devolved from buddy scholars and statesmen to butthurt babies is, sadly, a trend that’s been happening for quite a while now, as higher ed has facilitated, if not encouraged, them to elevate their feelings above all else. But why is there no grown up in the room?  If it’s “fair” that academics retaliate by suit against students for butthurt of their own, then cries of academic freedom will be replaced by screams to “lawyer up.”

The insanity has to stop somewhere, and it would seem that telling the babies to suck it up is too little, too late. But any professor who thinks suing a student is going to vindicate her academic reputation has lost already.  Stop the madness. Grow up. Everyone.

May 24, 2014 in Legal Education | Permalink | Comments (0)

Ex-BigLaw Partner Pleads Guilty in Tax Case; He Can’t Remember When He Stopped Filing Returns

ABA Journal, Ex-BigLaw Partner Pleads Guilty in Tax Case; He Can’t Remember When He Stopped Filing Returns:

A former partner at McDermott Will & Emery in Miami has pleaded guilty to three counts of failing to file a tax return based on allegations he failed to report more than $8.2 million in partnership profits.

Steven Siff, 56, of Davie, pleaded guilty on Thursday. ... He was accused of failing to report the profits between 2001 and 2011, though Siff told the judge he couldn’t remember exactly when he stopped filing returns. ... Siff has agreed to pay more than $900,000 in restitution. He also faces a possible fine of $300,000 and a possible sentence of three years in prison.

May 24, 2014 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 380

IRS Logo 2House Committee on Oversight & Government Reform, Testimony: In 2010, Justice Department Sought Lois Lerner’s Help to Prosecute Tax Exempt Groups Engaging in Politics:

House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., and Subcommittee on Economic Growth, Job Creation and Regulatory Affairs Chairman Jim Jordan, R-Ohio, today requested that the Department of Justice make DOJ Public Integrity Section Chief Jack Smith available for a transcribed interview. The request comes after Smith’s subordinate, Director of DOJ’s Election Crimes Branch, Richard Pilger, told Committee investigators in a transcribed interview that the Justice Department met with Lois Lerner in October 2010, two and a half years earlier than previously known, to discuss potential criminal enforcement relating to political speech of nonprofit groups in the wake of the Supreme Court’s Citizens United decision.

“The Committee’s transcribed interview of Richard Pilger presents further troubling information about the Department’s contemplated prosecution of nonprofit groups for false statements,” Chairman Issa and Chairman Jordan state in the letter.  “It is apparent that the Department’s leadership, including Public Integrity Section Chief Jack Smith, was closely involved in engaging with the IRS in wake of Citizens United and political pressure from prominent Democrats to address perceived problems with the decision.”

“According to Mr. Pilger,” the letter continues, “the Justice Department convened a meeting with former IRS official Lois Lerner in October 2010 to discuss how the IRS could assist in the criminal enforcement of campaign-finance laws against politically active nonprofits.  This meeting was arranged at the direction of Public Integrity Section Chief Jack Smith.”

The meeting occurred days before Lois Lerner spoke at a Duke University event about the immense political pressure on the IRS to “fix the problem” created by Citizens United before the 2010 midterm election.

Earlier this week, Chairman Issa issued a subpoena after Pilger declined to answer critical questions on the instructions of a Justice Department lawyer during a transcribed interview on May 6, 2014.  The subpoena followed an April 23, 2014 letter from 17 Members of the Committee requesting materials concerning the Department’s involvement in efforts to scrutinize tax-exempt applicants after emails surfaced between Pilger and the Internal Revenue Service’s Lois Lerner where they discussed singling out and prosecuting tax-exempt applicants, at the urging of a Democratic Senator.

Letter embedded below.

Continue reading

May 24, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, May 23, 2014

Weekly Tax Roundup

 Weekly Roundup

May 23, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

May 23, 2014 in Legal Education, Weekly Legal Education Roundup | Permalink | Comments (0)

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

May 23, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Cronyism Blamed for Half of Univ. of Texas Law School Grads’ Inability to Pass the Bar, Many With LSAT Scores Below 150

Raw Story:  Cronyism Blamed for Half of Univ. of Texas Law School Grads’ Inability to Pass the Bar:

Texas 2A mushrooming scandal at the University of Texas has exposed rampant favoritism in the admissions process of its nationally-respected School of Law.

According to Watchdog.org, Democratic and Republican elected officials stand accused of calling in favors and using their clout to obtain admission to the law school for less-than-qualified but well-connected applicants.

The prestigious program boasts a meager 59 percent of recent graduates who were able to pass the Texas bar exam. Those numbers rank UT “dead last among Texas’ nine law schools despite it being by far the most highly regarded school of the nine,” wrote Erik Telford at FoxNews.com.

“Every law school — even Harvard and Yale — turns out the occasional disappointing alum who cannot pass the bar,” said Telford. “In Texas, however, a disturbing number of these failed graduates are directly connected to the politicians who oversee the university’s source of funding.

Feb. 2014 Texas Bar (1st Time Takers)

Rank

School

Number

Pass Rate

1

Texas Tech

24

91.7%

2

Baylor

37

89.2%

3

Texas A&M

48

87.5%

4

Houston

32

84.4%

5

South Texas

111

83.8%

6

SMU

25

72.0%

7

St. Mary’s

42

66.7%

8

Texas Southern

24

66.7%

9

Texas

17

58.8%

Watchdog.org, Who Got the 128? UT Law Admits Students With Bad LSAT Scores:

Dozens of students admitted to UT Law in recent years have scores on the Law School Admissions Test, or LSAT, that are below the standards of the lowest ranked law schools in the country, a Watchdog.org investigation into admissions favoritism has found.

The LSAT is scored on a scale of 120-180. UT Law students get a median score of 167, according to the 2014 US News survey, and the great majority of the class scores a 160 or better. 

Even a score in the 170s with a near-perfect grade point average is no guarantee of admission, as this roster of self-reported scores for UT applicants from lawschoolnumbers.com makes clear. ...

With a score below 150, you’re something of a longshot even at the lowest ranked law schools in the country. The University of La Verne College of Law in California, for example, came in dead last in the peer reputation survey on the 2013 US News rankings of accredited law schools, yet three-quarters of its students scored a 150 or better.

In recent years, UT Law has admitted students not just with LSATs in the 140s, but with scores as low as 138, 137, 136, even 128. Several of them were rejected by other Texas law schools of lesser reputation. A 128 is down at the very bottom 1 percent of test-takers nationwide. It means the person got less than a quarter of the answers correct. 

Watchdog.org requested the LSAT scores of 122 UT Law students from four other public law schools in Texas, figuring that most people apply to more than one law school. We obtained scores for 47 people from the other schools, almost all of them with names redacted. Only six of the 47 scores were above 160.

The average high score for the applicants on our lists was 149.7, which is barely good enough for the worst law schools in the country. Even schools like Whittier Law College and Golden Gate University School of Law, which put less than a fifth of their graduates into full-time jobs, expect most of their class to have scores above 150.

A few commenters attacked Watchdog.org’s recent report on the political connections of dozens of students who had failed the bar exam at least twice in recent years, on the grounds that bar failure didn’t prove that the student had poor LSAT scores. The argument, in other words, is that just because somebody failed the bar (twice) doesn’t mean he didn’t deserve his place at UT.

These LSAT scores, however, prove just that. Almost every score we got was somewhere between borderline and horrendous. There were 18-24 scores below 150 and five to six scores below 140. ...

The 122 names we requested came from a database we built to tally the number of times UT Law grads had failed the bar. We requested the LSAT scores of the 90 Longhorns who failed the bar two or more times from 2006-2013. We figured that their struggles to pass the bar — 42 of them never passed — made them the most likely candidates to have benefited from favoritism. We requested the scores of 26 others who passed the bar on a second try, who also either shared a last name with a lawmaker or who had already attained a high-level government job.Then we picked six current UT Law students, five for no reason other than to obscure our interest in the sixth: Jonathan Seliger, son of state Sen. Kel Seliger, who is chairman of the Higher Education Committee. ...

We provide all three lists here (Texas Tech, Texas A&M, TSU) for any additional analysis and comments from readers. ...

Although it’s impossible to say conclusively from this sample whether affirmative action is a factor, as opposed to favoritism to a politician or a donor to UT’s Law School Foundation, we can say that the demographics of our list roughly reflect the state’s demographics.

Update:  Of course, there are far fewer first-time takers of the February bar exam (360 in 2014) than of the July bar exam (1,759 in 2013).  Here are the comparable data for the July 2013 bar exam:

July 2013 Texas Bar (1st Time Takers)

Rank

School

Number

Pass Rate

1

Baylor

121

97.5%

2

Texas

268

95.5%

3

SMU

214

91.6%

4

South Texas

263

89.4%

5

Houston

217

88.0%

6

Texas Tech

192

86.0%

7

Texas A&M

127

85.8%

8

St. Mary’s

227

82.8%

9

Texas Southern

130

79.2%

May 23, 2014 in Legal Education | Permalink | Comments (8)

Alm & Soled: Improving Tax Basis Reporting For Passthrough Entities

Tax Analysys Logo (2013)James Alm (Tulane) & Jay Soled (Rutgers), Improving Tax Basis Reporting For Passthrough Entities, 143 Tax Notes 809 (May 19, 2014) :

Tax basis reporting is a notoriously complex enterprise, and taxpayer compliance is lackluster at best. One area of the law in which basis reporting remains absent is for passthrough entity investments, such as partnerships and S corporations. As a result, many taxpayers do not know the basis they have in their passthrough investments. These taxpayers must therefore estimate the tax basis they have in those investments, often producing inflated basis figures and, as a byproduct, smaller taxable gains and larger taxable losses. In light of its proven track record in the area of marketable securities (where third-party tax basis reporting has recently become mandatory), Congress should make third-party tax basis reporting for passthrough entities a similar reality. Mandating passthrough entity basis reporting would greatly simplify the compliance process, alleviate the IRS's burdensome task of trying to detect basis misreporting, and produce billions of dollars in revenue without raising taxes.

May 23, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

Georgetown Law Alum Settles Lawsuit Seeking Return of $7.5 Million Donation Over Naming Rights Dispute Following Insider Trading Conviction

Georgetown Law Logo (2013)Following up on my previous post:  National Law Journal, Georgetown Law Alum Settles Donation Spat:

A multimillion-dollar donor to Georgetown University dropped his lawsuit against the school this week.

Scott Ginsburg, who graduated from Georgetown University Law Center in 1978, gave millions to the school. He sued last year to get the money back, accusing Georgetown of violating an agreement to name a building after him. Georgetown said Ginsburg agreed to give up the naming rights after he was found civilly liable for insider trading. The law school filed a counterclaim for $9 million it said he still owed.

Lawyers for Ginsburg and Georgetown filed papers on May 19 in the U.S. District Court for the District of Columbia alerting the judge that both sides had agreed to drop their claims. The notice didn’t include any other details and the parties were mum on the settlement terms.

Ginsburg’s attorney, Graeme Bush of Zuckerman Spaeder, said in an email that his client and the school were “focusing on future partnerships.”

May 23, 2014 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 379

IRS Logo 2IRS Update on the Proposed New Regulation on 501(c)(4) Organizations:

Last November, Treasury and the IRS proposed a new regulation governing political activity of section 501(c)(4) organizations. The proposal generated over 150,000 written comments — the most comments ever received by Treasury and IRS on a proposed tax regulation. Consistent with our standard rulemaking process, we intend to review those comments carefully, take into account public feedback, and consider any necessary changes. Consistent with what Commissioner Koskinen has previously stated, it is likely that we will make some changes to the proposed regulation in light of the comments we have received. Given the diversity of views expressed and the volume of substantive input, we have concluded that it would be more efficient and useful to hold a public hearing after we publish the revised proposed regulation. Treasury and the IRS remain committed to providing updated standards for tax-exemption that are fair, clear, and easier to administer.

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May 23, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, May 22, 2014

NLJ: Law Schools Paid $2 Million to Judges for Lectures, Teaching in 2012

National Law Journal, Paying For Prestige: Law Schools Paid Judges Nearly $2 Million for Teaching, Lecturing in 2012:

Law schools paid federal appeals judges anywhere from several thousand dollars for a lecture to nearly $278,000 for full-semester teaching in 2012 — at once buying prestige and giving students a direct line to some of the judiciary's top legal minds.

Senior Judge Douglas Ginsburg of the U.S. Court of Appeals for the D.C. Circuit was the top earner, receiving $277,906 from New York University School of Law, according to the most recent financial disclosure reports judges must file under federal law. NYU Law paid $190,528 to D.C. Circuit Senior Judge Harry Edwards.

Ginsburg and Edwards were among five senior judges who reported law school salaries of at least $100,000, according to the disclosures.

All told, these judges were among 57 active and senior appeals judges reporting income from U.S. law schools. The NLJ reviewed 257 financial reports released in late 2013 and this year. Together, the judges earned nearly $2 million for teaching and lecturing as they navigated a thicket of ethics rules that restrict activity off the bench. The latest reports covered information from 2012.

Top-ranked law schools — including Columbia Law School, Duke Law School, Harvard Law School, NYU Law and Yale Law School — brought the most judges to campus, according to income judges reported and travel reimbursements they disclosed for moot courts and other events.

Judges burnish a school's reputation among prospective students, donors and law school rankings voters. They bring real-world expertise to the classroom as students face growing pressure to enter the job market with practical skills. And, judges say, the extra income doesn't hurt.

TOP LAW SCHOOL EARNERS
NLJ 3

TOP PAYING LAW SCHOOLS
NLJ 4

May 22, 2014 in Legal Education | Permalink | Comments (0)

318,000 Federal Workers Owe $3.3 Billion in Back Taxes (Delinquency Rate Is 33% Higher Among VA Employees)

318,462 federal workers and retirees owed more than $3.3 billion in back income taxes as of September 30, 2013, a delinquency rate of 3.27% (compared to 8.7% for the entire U.S. population). See the full spreadsheet here.

Among the 18 executive departments, the embattled Department of Veterans Affairs has the second highest delinquency rate among its employees:  4.38% (behind the Department of Housing and Urban Development's 5.29%).

Among 27 large (> 1,000 employees) independent agencies, the Federal Reserve has the third highest delinquency rate:  6.51%.

The delinquency rate is 4.87% in the House of Representatives and 2.43% in the Senate.

In the tax world, the delinquency rate is 3.02 in the Tax Court and 1.20% in the Treasury Department (the IRS is not separately broken out).

For prior years data, see:

May 22, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

District Court Dismisses Atheists' Challenge to Tax Benefits for Churches and Clergy

Christianity Today:  Good News for Churches Worried About Losing Their Pastor's Best Benefit to Atheist Lawsuits:

A federal judge in Kentucky has thrown out an atheist challenge to tax benefits for churches and clergy—a decision that stnds in opposition to the high-profile overturning of the IRS's clergy housing allowance by a Wisconsin federal judge in November.

Three groups—American Atheists, Atheists of Northern Indiana, and Atheist Archives of Kentucky—had argued that the current tax code provisions unfairly favor churches and pastors, reports the Evangelical Council for Financial Accountability (ECFA). According to ECFA, their suit objected to:

  • the church exemption from the requirement to file applications for recognition of tax-exempt status (Form 1023),
  • the church exemption from filing annual information returns (Form 990),
  • the clergy housing exclusion,
  • the exemption from income tax withholding and FICA taxes for ministers, and
  • the specific audit procedures for churches.

The plaintiffs relied heavily on a recent ruling by Wisconsin judge Barbara Crabb upholding the Freedom from Religion Foundation's (FFRF) claim that the clergy housing allowance is unconstitutional. (CT's sister pub, Church Law and Tax, offers 10 takeaways.] The Wisconsin ruling is on hold while the case is appealed to the Seventh Circuit, and would only affect pastors in Wisconsin, Illinois, and Indiana if upheld.

But Kentucky judge William O. Bertelsman said the Wisconsin case was inapplicable, because it was brought by two FFRF leaders who said they could not receive tax-exempt housing because they weren't practicing clergy. In Kentucky, however, there were "no named individual plaintiffs" and also no "employees that receive a housing allowance" that they are suing on behalf of.

"The FFRF decision is narrow," challenging only the clergy housing exemption, Bertelsman wrote.

May 22, 2014 in Tax | Permalink | Comments (0)

Rosenbloom, Noked & Helal: A Proposal for an International Tax Cooperation Forum

Florida Tax ReviewH. David Rosenbloom (NYU), Noam Noked (Harvard) & Mohamed S. Helal (Harvard), The Unruly World of Tax: A Proposal for an International Tax Cooperation Forum, 15 Fla. Tax Rev. 57 (2014):

International cooperation in tax policy is deeply fractured. Inconsistencies, loopholes and ineffective mechanisms—that could be avoided if efficient collaboration between countries existed—have created significant inefficiency losses for decades. This paper focuses on the institutional infrastructure underlying international cooperation in tax issues and argues that the current forums in which international cooperation in tax issues occurs do not provide an adequate platform in which countries with similar interests can effectively promote collaborative effort. To facilitate cooperation, this paper puts forward a proposal to create a new institution that is currently missing from the international tax policy-setting arena: an informal forum for coordination between countries that share similar interests in tax policy, inspired by the model of “Like Minded Groups” in international organizations. This forum will enable countries that share similar interests to cooperate and reach understandings about necessary policy changes. We mention two major projects that this forum could promote—efforts to curtail tax evasion and efforts to harmonize different aspects of tax policy. We argue that this model might have significant advantages in promoting cooperation, reducing the “competitiveness” threat, pushing forward policies and overcoming external and domestic pressures. Due to the current challenges in the field of tax policy, and the difficulties in forming cooperation within the current institutional framework, the proposed model is worth serious discussion and consideration.

May 22, 2014 in Scholarship, Tax | Permalink | Comments (0)

Buckles: Obedience Norms and the Overseers of Charities

Johnny Rex Buckles (Houston), How Deep Are the Springs of Obedience Norms that Bind the Overseers of  Charities?, 62 Cath. U. L. Rev. 913 (2013):

This Article explores whether and how the exercise of discretion by charity fiduciaries in recasting a charity’s direction is, and should be, limited. Analyzing this basic issue raises additional, difficult inquiries: If the law does limit the ability of charity fiduciaries to determine the charitable paths of their entities, what standards govern the exercise of fiduciary discretion? To what extent does , and should, the law treat fiduciaries of charitable trusts dissimilarly from those who govern charitable nonprofit corporations? What role should governmental actors play in monitoring these decisions by charity managers? If governmental actors should assume some monitoring role, should their review of fiduciary decisions be ex ante or ex post? Which governmental actors should be involved? Can donors and other stakeholders sufficiently protect their interests absent a strong supervisory role by the government? ...

Continue reading

May 22, 2014 in Scholarship, Tax | Permalink | Comments (0)

The Most Overrated and Underrated Law Schools: U.S. News v. SSRN

US News SSRNIn Ranking Law Schools: Using SSRN to Measure Scholarly Performance, 81 Ind. L.J. 83 (2006), Bernie Black (Northwestern) and I compared the ranking of law schools using U.S. News and SSRN downloads.  In three prior posts, I  updated the chart on pages 98-102, showing the ranking of law schools under U.S. News (overall and peer reputation) and SSRN (recent and all-time downloads).

On page 124 of the article, we listed the most "undervalued" and "overvalued" law schools, based on the spread between their U.S. News peer reputation and SSRN all-time downloads. In three prior posts, I listed the most "undervalued" and "overvalued" law schools by U.S. News quartile.  Here are the 50 most "undervalued" and "overvalued" law schools:

Schools Undervalued by US News

Schools Overvalued by US News

School

US News

SSRN

Spread

School

US News

SSRN

Spread

T. Jefferson

181

73

-108

Baylor

76

203

+127

Suffolk

116

29

-87

CUNY

116

211

+95

Chapman

139

63

-76

Howard

99

191

+92

NY Law School

128

53

-75

Oregon

53

141

+88

St Thomas(MN)

139

65

-74

Oklahoma

67

154

+87

Widener

139

67

-72

Arkansas (LR)

99

183

+84

Baltimore

116

50

-66

Tulane

43

125

+82

Pace

128

70

-58

Nebraska

67

149

+82

J. Marshall (IL)

152

104

-48

Montana

116

196

+80

Seton Hall

87

42

-45

Gonzaga

99

174

+75

Drake

128

83

-45

St. Mary's

158

223

+65

South Texas

152

107

-45

Richmond

67

129

+62

Touro

158

115

-43

Wyoming

116

177

+61

Florida Int’l

152

111

-41

Hawaii

76

135

+59

UMKC

99

58

-41

Arkansas (FAY)

87

145

+58

William Mitchell

139

99

-40

Kentucky

67

124

+57

Michigan State

87

49

-38

N. Carolina Cent.

168

224

+56

George Mason

53

16

-37

West Virginia

109

163

+54

Ohio Northern

168

134

-34

SMU

53

106

+53

San Diego

53

21

-32

Maine

99

152

+53

Tennessee

59

28

-31

Wake Forest

35

87

+52

Penn State

76

46

-30

Duquesne

139

190

+51

Valparaiso

152

122

-30

Catholic

87

137

+50

San Francisco

109

81

-28

South Dakota

139

187

+48

Temple

53

26

-27

Connecticut

49

96

+47

American

49

23

-26

North Dakota

128

175

+47

Albany

116

91

-25

William & Mary

28

74

+46

Florida Coastal

186

161

-25

South Carolina

87

132

+45

Loyola (CA)

59

35

-24

Appalachian

181

226

+45

Texas Tech

116

92

-24

UC-Hastings

35

79

+44

Hamline

139

116

-23

Georgia State

67

110

+43

Southwestern

128

105

-23

Kansas

59

102

+43

St Thomas (FL)

173

150

-23

Wisconsin

26

68

+42

Illinois

35

13

-22

Tulsa

116

158

+42

Case Western

59

38

-21

Rutgers-Newark

76

118

+42

G. Washington

22

2

-20

LSU

99

140

+41

Rutgers-Cam.

76

56

-20

Mississippi Col.

158

199

+41

Regent

186

166

-20

Detroit

173

213

+40

N. Kentucky

158

139

-19

BYU

46

85

+39

Cardozo

49

31

-18

New Mexico

76

115

+39

Samford

139

121

-18

Northeastern

87

126

+39

Santa Clara

76

60

-16

Loyola (LA)

109

147

+38

New Hampshire

128

114

-14

Alabama

35

72

+37

Roger Williams

152

138

-14

Cincinnati

76

113

+37

New England

168

154

-14

Washington & Lee

28

64

+36

Brooklyn

67

54

-13

Washington (WA)

35

66

+31

Hofstra

99

86

-13

Quinnipiac

128

159

+31

Seattle

87

76

-11

Faulkner

181

209

+28

Washburn

128

117

-11

Mercer

116

143

+27

S. Illinois

139

128

-11

Campbell

168

195

+27

Louisville

99

89

-10

Georgia

35

61

+26

 

 

 

 

North Carolina

19

45

+26

 

 

 

 

Idaho

116

142

+26

May 22, 2014 in Law School Rankings, Legal Education | Permalink | Comments (8)

Aprill: Nonprofits and Political Activity: Lessons from England and Canada

TaxSymposiumHeaderEllen P. Aprill (Loyola-L.A.), Nonprofits and Political Activity: Lessons from England and Canada, 142 Tax Notes 1114 (Mar. 10, 2014) (Symposium on Tax Reform in a Time of Crisis):

In the recent debate about nonprofit organizations and political activity, little attention has been paid to what we can learn from the approach of other countries. This piece compares U.S. rules with those of Canada and England, in the context of both their nonprofit rules applicable to political activity and their campaign finance laws. As the piece explains, England and Canada, like the U.S., prohibit direct or indirect campaign intervention by charities. These countries, however, differ from the U.S. and each other in the amount of lobbying and other non-campaign political engagement permitted by charities. England and Canada do not limit noncharitable nonprofits from engaging in any type of political activity under their nonprofit or tax laws. Both countries, however, regulate elections and campaign finance in general more stringently than does the U.S.

May 22, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (1)

Rostain & Regan: Lawyers, Accountants, and the Tax Shelter Crisis

ConfidenceTanina Rostain (Georgetown) & Milton C. Regan Jr. (Georgetown), Confidence Games: Lawyers, Accountants, and the Tax Shelter Crisis (MIT Press, 2014):

For ten boom-powered years at the turn of the twenty-first century, some of America’s most prominent law and accounting firms created and marketed products that enabled the very rich—including newly minted dot-com millionaires—to avoid paying their fair share of taxes by claiming benefits not recognized by law. These abusive domestic tax shelters bore such exotic names as BOSS, BLIPS, and COBRA and were developed by such prestigious firms as KPMG and Ernst & Young. They brought in hundreds of millions of dollars in fees from clients and bilked the U.S. Treasury of billions in revenues before the IRS and Justice Department stepped in with civil penalties and criminal prosecutions. In Confidence Games, Tanina Rostain and Milton Regan describe the rise and fall of the tax shelter industry during this period, offering a riveting account of the most serious episode of professional misconduct in the history of the American bar.

Rostain and Regan describe a beleaguered IRS preoccupied by attacks from antitax and antigovernment politicians; heightened competition for professional services; the relaxation of tax practitioner norms against aggressive advice; and the creation of complex financial instruments that made abusive shelters harder to detect. By 2004, the tax shelter boom was over, leaving failed firms, disgraced professionals, and prison sentences in its wake. Rostain and Regan’s cautionary tale remains highly relevant today, as lawyers and accountants continue to face intense competitive pressure and regulators still struggle to keep pace with accelerating financial risk and innovation.

May 22, 2014 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Muller: Winner and Losers From the End of Flagging LSAT Scores of Disabled Students

Following up on yesterday's post, DOJ Enters $7.7 Million Consent Decree to Settle ADA Lawsuit Against LSAC Over ADA Accommodation in Administration of LSAT:  Derek Muller (Pepperdine), LSAC Accommodated LSAT Flagging Settlement Will Affect Some Negatively:

LSACTheoretically, the practice of "flagging" accommodated scores caused a stigma. The worry was that law school admissions committees would view such flags negatively and make them less inclined to admit accommodated students.

But there was a benefit to this regime, too--at least to some. Accommodated students would not have their LSAT scores reported to the ABA, or, more importantly for law school admissions committees' sakes, U.S. News & World Report in the school's median scores. The ABA has explained that LSAC has no data demonstrating that accommodated LSAT scores have the same meaning as non-accommodated scores, so it excludes them from its totals. ...

Under the old regime, an accommodated test-taker with a 168 LSAT and a 3.0 GPA would be disadvantaged. Her file would indicate that she was an accommodated test-taker, and, despite her high LSAT score and sound index score, an admissions committee concerned about its medians would be less inclined to admit her. That's because her LSAT score would not be included in the USNWR medians. But, under the post-consent decree regime, the admissions committee would have no idea that she was accommodated, and it would be more inclined to admit her (if worried about its medians).

In contrast, under the old regime, an accommodated test-taker with a 153 LSAT and a 3.9 GPA would be advantaged. His file would indicate that he was an accommodated test-taker, and, despite his low LSAT score, an admissions committee concerned about its medians would be more inclined to admit him. That's because his LSAT score would not be included in the USNWR medians. But, under the post-consent decree regime, the admissions committee would have no idea that he was accommodated, and it would be less inclined to admit him.

The benefits, then, will redound to accommodated test-takers who score well on the LSAT. But accommodated test-takers who perform poorly on the LSAT will, in all likelihood, perform worse.

May 22, 2014 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 378